The October 1979 Regime of Monetary Control and the Behavior of the Money Supply in 1980

Deskripsi

Hetzel develops an analytical framework to explain how this regime functions, contrasting it with an alternative system based on contemporaneous-reserve accounting and a total-reserves target. He argues that the October 1979 regime relies on unpredictable behavioral relationships—specifically, the slope of the reserve-supply schedule, the markup of loan rates over the federal funds rate, and shifts in the bank-credit demand schedule. Hetzel concludes that the regime is inherently flawed for short-run control and suggests that a shift to contemporaneous-reserve accounting with a total-reserves operating target might offer more stability and predictability.